A list of state licenses and disclosures is available here. When it comes to calculating affordability, your income, debts and down payment are primary factors. How much house you can afford is also dependent on the interest rate you get, because a lower interest rate could significantly lower your monthly mortgage payment. While your personal savings goals or spending habits can impact your affordability, getting pre-qualified for a home loan can help you determine a sensible housing budget.
Zillow's affordability calculator allows you to customize your payment details, while also providing helpful suggestions in each field to get you started. You can calculate affordability based on your annual income, monthly debts and down payment, or based on your estimated monthly payments and down payment amount.
Our calculator also includes advanced filters to help you get a more accurate estimate of your house affordability, including specific amounts of property taxes, homeowner's insurance and HOA dues if applicable. Learn more about the line items in our calculator to determine your ideal housing budget. This is the total amount of money earned for the year before taxes and other deductions. You can usually find the amount on your W2 form. If you have a co-borrower who will contribute to the mortgage, combine the total of both incomes to get your annual income.
These are recurring monthly expenses like car payments, minimum credit card payments or student loans. You can adjust this amount in our affordability calculator as needed. The amount of money you spend upfront to purchase a home.
The total of your monthly debt payments divided by your gross monthly income, which is shown as a percentage. Your DTI is one way lenders measure your ability to manage monthly payments and repay the money you plan to borrow.
You can get an estimate of your debt-to-income ratio using our DTI Calculator. The amount that a lender charges a borrower for taking out a loan. Typically, the interest rate is expressed as an annual percentage of the loan balance. The borrower makes payments with interest to the lender over a set period of time until the loan is paid in full. Our affordability calculator uses the current national average mortgage rate. Your interest rate will vary based on factors like credit score and down payment.
Calculate your mortgage interest rate. The length by which you agree to pay back the home loan. The most common term for a mortgage is 30 years, or months, but different terms are available depending on the type of home loan that works best for your situation. You can edit your loan term in months in the affordability calculator's advanced options. When owning a home, you pay annual property taxes based on the assessed value of the property or purchase price of the home, which can affect your affordability.
The tax rate you pay can vary by state, county and municipality. Our calculator assumes a property tax rate by default, but you can edit this amount in the calculator's advanced options. To obtain a more accurate total payment amount, get pre-qualified by a lender.
Choose between loan terms of , , and year mortgages and see your estimated home price, loan amount, down payment and monthly mortgage payments change.
Our mortgage calculato r and home value estimator can help you be a confident homeowner. With our mortgage calculator, you can see an estimate of your total mortgage payment, including principal, interest, taxes, and insurance. And our home value estimator shows you how much the homes you're looking at may be worth. From just thinking about buying to owning your own home, our how-to articles and blog posts are here to help you at every step. Want to learn more about mortgages, refinancing and home equity?
Our mortgage dictionary covers a variety of terms, and our FAQs provide answers to common buying and homeownership questions. When you're ready to get started, our Home Lending Advisors are ready to help. You can also check current rates and start the prequalification process.
If you're interested in buying a second home or refinancing, the same applies. Our Home Lending Advisors are here to answer any questions you have. Even though you may qualify for the amount listed above, it may not be suitable for you.
You should review your personal situation, and work with your financial advisor, to decide how much you can comfortably afford to borrow. Subject to individual program loan limits. Your debt-to-income ratio is calculated by adding up all of your monthly debt payments and dividing them by your gross monthly income.
Your gross monthly income is generally the amount of money you have earned before your taxes and other deductions are taken out. Department of Agriculture, Veterans Affairs and the Federal Housing Administration have very stringent criteria, which may also include specific caps on your income, regardless or how low your debt levels are.
While measuring debt-to-income is useful for getting a baseline feel for what you may qualify for, the CFPB proposed shifting mortgage qualification away from DTI to using a pricing based approach. Though you will need to meet with a mortgage lender to get a precise understanding of how your financial circumstances affect how much money you can afford to borrow, using the above income qualification calculator can help you get an understanding of what you are likely to be able to afford before you ever start the process of looking for a home or getting pre-qualified for a mortgage.
Just enter the property value, down payment you plan to make, interest rate you are likely to qualify for, length of the loan you desire, your estimated front and back ratio using our affordability calculator found here and your estimated annual taxes, insurance and private mortgage insurance. The calculator includes standard amounts for each item in case you aren't sure what to enter. Your results will be e-mailed to you within moments, and you will have a clear understanding of what you can expect when you go meet with a mortgage lender.
The Federal Reserve has hinted they are likely to taper their bond buying program later this year. Lock in today's low rates and save on your loan. Answer a few questions below and connect with a lender who can help you refinance and save today!
Current Mortgage Rates. Financial Analysis Switch to Plain English. This calculator comes with three convenient, helpful options for viewing your results. Check your refinance options with a trusted local lender. Estimated front and back ratios helps you to limit your housing and necessary living spending. Show Schedule Table. Send calculation results to email.
For those who are self-employed, lenders confirm your income by reviewing tax return transcripts from the IRS. You need to prove you have a reliable income source. Lenders are concerned with the viability of your business and whether you can sustain monthly mortgage payments. But once your lender sees your income is high and sustainable enough, you can get approved.
Once you receive a pre-approval letter, a lender approves a specific amount and includes a possible interest rate. Consumers who obtain pre-approval are perceived as more serious homebuyers. But take note: Pre-approval letters are only valid for 60 to 90 days. So time your application accordingly. If you do not secure an offer within that time, you must reapply to get a pre-approval letter again.
The Pre-Approval Advantage. Pre-approved homebuyers are perceived to offer more financial reliability than pre-qualified ones. While pre-qualifying allows you to assess your readiness for a mortgage, pre-approval is a conditional commitment from a lender to officially offer you a loan.
This is why it holds more weight when it comes to securing a mortgage deal. When qualifying for a mortgage, lenders rely on standard indicators that determine whether a borrower can repay a loan.
These financial factors also influence how much they are willing to lend borrowers. Lenders will thoroughly evaluate your income and assets, credit score, and debt-to-income ratio. One of the first things lenders assess for mortgage eligibility is income. This is a major factor because it shows how stable and predictable your finances are. Having a high income with stable employment lowers default risk for lenders.
Thus, you have higher chances of qualifying for a mortgage with a long-term job and reliable sources of income.
Besides assessing your income from work, lenders also check any additional money you may receive. Take note: Additional income is only considered by lenders if the source can continue for 3 years. This includes money from sources such as:.
Next, expect lenders to evaluate your assets. Borrowers with high-value assets are perceived as less risky by lenders. Assets are considered a valuable financial cushion that can protect you in case of emergencies. In the event of financial hardship such as sudden job loss or company closure, assets help keep you afloat while looking for another stable source of funds. To verify your assets, lenders request for the following documents:.
Another important factor lenders watch out for is your debt-to-income ratio DTI. This is a percentage that shows how much of your monthly income goes toward your debts.
Specifically, DTI measures your total monthly debt payments compared to your gross monthly income. Likewise, a low DTI ratio is a sign you have enough money coming in to pay for your debts. This lowers the risk of defaulting on your mortgage. Furthermore, expect conventional mortgages to have different DTI limits from government-backed loans. Most homebuyers generally choose conventional loans , which are not directly financed by the government. Conventional loans are usually packaged into mortgage-backed securities that are guaranteed by Fannie Mae and Freddie Mac.
These are available through private lenders such as banks, credit unions, and mortgage companies. PMI on Conventional Loans. This is an added fee that protects your lender if you fail to pay back your loan. PMI is typically rolled into your monthly payments, which costs 0.
MIP for Government-backed Loans. This added fee protects your lender in case you default on your loan. MIP is usually rolled into your monthly payments, which costs between 0. For this reason, borrowers with government-backed loans eventually refinance into a conventional mortgage to remove this extra cost. Since different loans cater to different needs, DTI limits vary per type of mortgage.
The table below details the front-end and back-end DTI requirements for conventional and government-backed mortgages:.
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